Skip to main content

tv   Fast Money  CNBC  September 3, 2009 12:00am-1:00am EDT

12:00 am
over the weekend. you started to see some of those trades come in, they were starting to sell. i realize it's on the wednesday. thursday, friday, then all of a sudden you've got monday off. premium decays very rapidly over the weekend. traders healthy that but i tell you what, it speaks volumes about the market right now. they expect movement to continue. >> karen, what were you doing today? >> not a whole lot, actually. we had some oil field services names. always interesting to watch them. pride was a name we really liked actually opened and got stronger during the day. that was nice. i was watching some of the hmo stuff. that was interesting. i don't own it. that to me was sort of the biggest mover of the day in my space, my world, i guess. that was -- otherwise, not a whole lot. kind of flat. >> joe makes a great point. dr. j was here. they told him that as well. you may have lost goldman sachs today, i'm not saying you did. you may have. it was down on the day on a pretty benign tape. you look at some of the specialty retailers that we said get short, the j. crews of the world. look what j. crew did today, down 2 1/2%. although you had a benign tape, there were some tells out there. after a horrible day yesterday we did nothing today to sort of get my encouragement back up so, i still think we're head down. >> wouldn't you think it would be worse, though, off yesterday? it was really bad, and today
12:01 am
really wasn't so bad. >> you know, fair point. given the tape we've had people have been buying dips. and you would have seen at least a week or two ago a bounce from yesterday's performance. we didn't see it today. it actually pretty much closed around the lows. which again, the volume's not there. this is a wednesday ahead of labor day.y. i'm not going to make a big deal out of it. >> that's why i don't think you saw that bounce. exactly what you're talking about. 13 million contracts on the options yesterday. we traded 18 million. so it shows you how significantly these volumes have pulled back. >> and volume might not be there but if you have goldman sachs at 158 and fresh capital on the sidelines if it's still a real price, do you pay that price and get in even if the volume's low? >> again, i hate to chase here. i don't think you have to chase goldman sachs here. it might be telling you something. i love the company, love what's going on. valuations, yes, are fair. but i would say this. if the broader market goes down to where i think it will, goldman sachs will not be spared. as a matter of fact, it might accelerate lower given all the people involved in it. so no, i don't chase it here. >> and i think you use goldman sachs as a hedge against the
12:02 am
market actually falling. but if you look back upon today i think it was favorable. it was a favorable tape. the fact that after 10:30 oil firmed up, clearly helped the entire brought market. >> can you back up for just a second? when you say use goldman sachs as a hedge against the broader market, goldman sachs is a canary in a coalmine. how is that a hedge against the broader market? >> yesterday first thing i did when ism came down s&p trading 10 and i saw the market stall out was to go in and buy goldman sachs puts. my thinking behind that was if anything, if the tape itself will roll over goldman sachs, the best in breed name, the most loved named on the street right now, that'll be the name that'll be sold the most actively. >> okay. let's move on to the next story here and talk about gold. it did break out today, up 24 bucks an ounce. only $20 below the 1,000 level. any buyers on gold here? >> everybody but me has been bullish on gold. i look stupid as paris hilton taking the s.a.t.s. sorry, paris-f you're watching.
12:03 am
>> she's not watching. we're good. >> tim's been on it. i have not been on it. i'll say this, though. >> that was hot. >> that was hot. >> i think you saw that today in gold. i'm not saying it can't continue to go higher. but it was a $25 news. might have been a $5 to $8 move in a normal market. that's my only point. if you're long it great job, it does look like it wants to break out. just remember the week we're involved in. >> i bought gold yesterday. i spent the entire day today not looking at it because i truly believe that this move in gold will be the move that takes gold above 1,000 and takes gold to fresh highs that you have not ever seen before. seasonally gold lines up perfectly. there is demand for bullion right now out there, and everyone has forgotten about gold as an investment vehicle. it had resiliency throughout the entire year. stayed above the 200-day moving average the entire year. and no one, no one talked about it until the last 24 hours. >> temptation to sell what -- >> i'm not -- no. temptation to sell my gold position, my gold futures, which i bought yesterday.
12:04 am
there is no reason to sell them right now. i'm holding on to it. i'm literally just not looking at gold because my theory, the fundamental analysis tells me we're going to make fresh eyes highs. >> one thing i'm seeing is just like with the financials when they start make the big moves you see it in the gold stocks these miners, something like goldcorp an amazing number of puts bought, maybe not necessarily in a negative fashion. maybe they're just buying these for protection because they want to hold on to these positions very similar to joe. they think gold is going higher, mining stocks are going higher. they're buying puts. the september 35 puts today in gg traded 35,000 against an open interest of 3,000. these were new positions being put on probably to protect those positions so they don't have to -- >> and it's not just gold, it's copper as well. he with spoke last night on the show about year on year demand coming out of production. chile and mexico, people want to get and stay with the copper theme. freeport-mcmoran is the play there. you don't want to short those names. >> all right. and pete, just to get back to the options activity here,
12:05 am
you're saying buying protection as opposed to buying the calls. if people don't want to get that stock hauled away from them on the upside so, they're banking there is an up side that they -- >> they potentially at least want to protect what they've got on. they want to hold on to the trade. the banks made such a big run. we saw a lot of put protection being bought across the banking sector. i think you're seeing the same type of activity right now in the gold sector. these gold miners. a lot of protection being bought. probably not necessarily negative paper. paper that wants to protect position that's are already put on as those stocks continue to go up. >> let's keep up with the options activity. and this one, switch over to the ag names today. pete, we saw a lot of activity yesterday, particularly in the mosaic sep 60 calls. >> mosaic was phenomenal. 115,000 calls against 17,000 puts. most of the activity in september. today it was intrepid potash, iti.
12:06 am
not potash. intrepid potash. iti is the symbol on this one. incredible, you look at the september 24, 25 calls, this is averaging about 3,600 contracts a day. they traded 17,000 in the first hour. those options, by the way, doubled in the next hour. they doubled from the previous price in the next hour. >> what's behind it? is it takeover? >> well, this whole thing's been a soap opera. we've been talking about taro and agrium and cs industries, this whole soap opera of who's going to try to buy who, valuation level. forget all that right now. this has nothing to do with takeovers, i don't think. maybe there is. but i can tell you the options activity is telling you people think that sector is definitely undervalued, valuations pushing it higher. >> positive comments about potash, one of the analysts said potash's spot price trading $100 below the all price. but let's caution about potash the stock. while the tape was going higher potash went from 100 down to about 86 today before it reversed higher. not saying you shouldn't own potash, valuations might be fair but this stock did not participate in the rally over the last couple of weeks. that may be telling you something as well. >> let's move on to the oil space. oil breaking out today despite a decline in inventories. bp one of the energy gainers after they discovered in the gulf of mexico 3 billion barrel
12:07 am
equivalents which add a 600 to 900 million barrels of oil equivalent p this is a ten-year prospect before any of this comes out of the ground and makes it to the u.s. >> what could go wrong? >> in ten years? good point. what could go wrong in ten years? but why would you buy bp on a ten-year prospect -- >> difficult to make it a tradable event. however, bp was higher on the day. go back for a second just to talk about oil futures themselves. i think they fought off a lot of negativity this morning. inventories were down slightly. contango, which we like to talk about, that came out a little bit out of the market as well. next week we've got opec. opec there's going to be a lot of chatter about what they would do. i would think they would leave the production and quota levels unchanged. so looking at oil, again, i still don't think you're short oil. the trade in oil is you're long or you're flat. >> this is a giant, quote unquote, discovery they're talking about. yes, it's ten years out. but that's your free call.
12:08 am
you look at the stock right now. 6 1/2% dividend yield. this is a stock we talked about time and time again, bp. then you look at the p/e levels and what they're going to potentially earn in 2010. not ten years from now, next year. you start to look the stock and say it looks awfully cheap, they've got a great balance sheet and the free call, which is this ten-year out unbelievable discovery they made in the gulf of mexico. >> do you think there was any impact in the move of oil price because of the closure of the deutsche bank double long crude -- >> no, because they work through swaps, and i think there was nothing to do with that. >> i'll tack the other side of the oil trade, though. i think you actually can be short some of names if you want to be short that's fine but i wouldn't be bouncing in. the oih is the way everybody plays it, frankly. and if you look since the takeover the other day, b.j. services, it hasn't really performed that well frankly. i think it's trading 103 and change. i still think it trades down 98. can you sell it short?
12:09 am
yeah-f you're looking for 5% or 6%. but don't pile in because -- >> although it's getting closer to the $100 level we talked about in oih. bmo capital initiated coverage on a lot of these offshore drillers today. barclays conference next week keep an eye on it.t. most of the names that were talked about in that whole piece from bmo, they'll be speaking there. i'm talking about transocean, noble, pride, all those names -- >> i love those names. >> karen loves pride. our next story here, the obama trade. hmos like una trading higher after the politico reporting the president has no plans to insist on a public insurance option. obama will address congress on health care next wednesday, according to top democrats. karen, we saw a nice rally pretty much across the board in this space today. you're looking at them. >> i am looking at them. they're really -- i mean, as a p/e multiple they're really cheap. one of the things that's been weighing on them is clearly obama care, but also unemployment and how many people
12:10 am
are going to be able tone roll in their product. but if you really believe the obama care threat is reseeding, receding, and i'd be so pissed if i jumped in and it went the other way, i just can't do it. but i think these are attractive. i'm guessing the obama cam leaked this story, that they want it out there, they want to see how people react to the idea of him backing away from the public option if in fact that's what comes to pass. then these are -- >> and if you want volatility, this is the area to look at because we've been talking about occasionally there's call activity, then there's been put activity. the last week or so we've even a combination of both, people wanting premium because it's such a volatile sector right now. the ups and downs -- yesterday this was a sector that looked terrible. today it looks great. up and down every day. if you want volatility, and it's a scary place to be but if you want it -- >> i agree with karen on valuation. we talked about unh $6 ago, but karen's right now, now you might get bopped on the head the other way. negative as the rhetoric was a couple months ago it's positive now for these stocks they could turn on a dime. uah valuation's fair. i think the trade at least for
12:11 am
the short term is over. >> karen, it sounds like -- for you. >> do it again. all show. >> do it again. do it again. >> there you have it, guy. >> karen, you sound like you have an internal struggle going on. you really want to -- >> i do. the forces of greed and fear. >> classic forces of wall street. >> wall street. >> at the end of the day, though, how do you reconcile those fears? people want to know. >> if i can't feel comfortable enough with the outcome of obama care, which i can't, then i can't -- >> you should feel comfortable with it because you said a couple months ago the unfortunate passing of ted kennedy was the catalyst for this to get done. so there it is. now it gets done. >> i think some form of it gets done but if the form isn't damaging to the insurers then they're good to own. when i actually put a trade on, i'll let you know, do the opposite. if you want to make money. i promise. >> the contrarian indicator. next right here dealmaking on the rise. disney, baker hughes kicking off
12:12 am
the week with two big m&a deals. over last six years m&a activity has actually picked up going into the foul. don't know if you can use history as any sort of guide in a very unusual year considering the spikes that we've seen there, may, june, july, didn't happen this year, so don't know if we can bank on that rise going into the fall this year. but things are different. we've got cash on the balance sheet. we've also got some pretty decent stock valuations. >> and you have a lot of different sectors by which that cash can be deployed. the one sector that most people will look at and say not going to happen, that's the sleeper. look at the potential opportunity with the asset managers and the brokerage names. you could see m&a activity there. >> it is about balance sheets and when you're looking at what sort of m&a you're talking about right now, it's tech, it's energy, and pharmaceutical. that has led us so far this year. they've got the incredible balance sheet. so i think that's still the area where you look. >> and i don't think you can discount entirely that the ceos who run these companies, they're human and they see -- they feel better when the world feels a little better.
12:13 am
they feel better when the market's better. even if they have to pay more for the acquisition and then they see their friend in the industry, that guy just went into the deal, you'd better go look. >> keeping up with the joneses. >> maybe there won't be good partners left to dance with if i don't do something. >> and i agree with joe. we've talked about asset managers being taken over. i think raymond james is a great one to look at, rjf, i think it's trading around 23, so it's had a nice run. when you talk about the pure m&a play you go back to two names, laz and ghl, you can own them both. >> because they handle the deals -- >> exactly. k-fine talked about it the other day. >> did i? >> and commander planet you left out our friends at disney. that's the one deal -- >> come on. let's not go crazy. >> commander planet. >> you think there's going to be more deals in the entertainment sector, joe? >> a lot of cash there. >> talking the tape today, palm and rim edging higher in a tough market. are you a buyer in this market?
12:14 am
>> i don't know how aggressively you would say i was active in there. >> you were buying qualcomm. >> intraday reversal. on the smartphone trade i do believe if you look at rim-f you look at palm, if you look at apple and you identify that the market share is going to grow to 35% of the entire handset industry by 2012, these are names you have to own. on tech itself intraday, guy highlighted it in the -- before the show started. call tomb there was a nice intraday reversal.l. it's a name we all like. reason to buy qualcomm, for trade. >> what's your justification fo qualcomm? >> i think paul jacobs is a great ceo. i think qualcomm is a story nobody really talked about. and we've actually talked about it on the show a few times. personally, i like where joe's headed that i just think this stock is pushing up against this 45 level that's been resistance in the past. i think a lousy tape takes it down to 41 or so. and i look to intel. and you go back last week they made those great comments, raised revenue, blah, blah, blah. intel's a lot lower since that announcement they made the other day. i think that's your tell for tech. >> i thought blah, blah, blah was emerging markets. >> that too. >> when you look at all these
12:15 am
names, you're talking about the smartphone, you've always got to go back to the iphone. you look at apple. and credit suisse the other day raised where they think the earnings are going. well over $7 a share. you look at the pc market. you look at apple.e. the new tablet. all of the various things that are coming out. this new leopard is unbelievable. the snow leopard. i tell you what. apple's starting to get very interesting. i haven't done anything yet. but under 165 even though 162's the high is very interesting. >> developers meeting next week. >> absolutely. some catalysts out there. >> back to the story of the day and that is of course gold breaking out. dennis gartman of "the gartman letter" joins us with the trade on the breakouts. dennis? you're saying what? where's gold heading next? above 1,000? >> well, looks like it's going higher, doesn't it? and i've been buying gold not in other terms, in terms of other foreign currencies, in terms of sterling, in terms of the euro. and it's interesting gold went up today in terms all those other currencies. so there's something going on
12:16 am
here. it's as if there's a movement away, not away from the dollar but a move away from currencies generally. what i also thought interesting today was that gold went up and so too did the bond market. gold went up today and platinum and palladium, the rather basic industrial metals didn't go up. so what i'm afraid of is you're seeing a movement away from currency and you're also seeing a vote against the economy. and i think there are a lot of tells, as you use -- as they say here on this show. >> that may be bearish on oil, then? >> i'm actually erring a little bit toward the bearish side on the oil market. and the operative word is a little bit. >> dennis, how much of the price action in gold do you think can be attributed to a change in the correlations? what i mean by that is everything was correlated at a 1. s&ps, oil, whatever it was, they all went the same direction. it looks like maybe gold is telling you correlations are going to go back to historical norms. >> joe, you're absolutely right. during the collapse last year from july on into march everything went down and all
12:17 am
correlations went to one. bonds went down, stocks went down. gold went down. crude went down. everything went lower. now you are in fact differentiating one from the other. you had gold go up today, and you had the grains go down. you had gold go up today violently, and you had the energy market go sideways. you had gold go up in the bond market, which characteristically when gold goes up bonds should falter. bonds went up. so those correlations are in fact breaking apart. >> hey, dennis, quick question for you. what percentage of a portfolio ought to have gold exposure right now? would you think. >> well, you should always probably have -- i'll gain the wrath or get the anger from the gold buyers. but i think everybody should have 2% or 3% in gold. and at times when you really get aggressive maybe you push it all the way to 5%. >> so small. >> still small. i mean, it is gold. >> all right, dennis. >> you can't eat it, and you can't use it for anything else. doesn't even get used for jewelry much anymore. >> all right. all good points. dennis gartman, always good to see you. >> melissa, do you feel the anti-gold, the anti-american
12:18 am
feeling coming from the corner over there? buy gold. >> 5% -- >> what's un-american about wanting to make a profit. that was the word on the street. here's what we have coming up next on "fast money" on cnbc. first some business worldwide. the next big shoe to drop -- >> commercial real estate. >> we've known about this for some time. >> if everyone says this is the next shoe to drop, will this investment instead land on two feet? finerman looks at the commercial real estate trends. and want to ride the oil trend to ease the pain at the pump? soon you may not be able to anymore. the growing etf crackdown. plus does your portfolio need a little captain in it? the north american chief of diageo speaks to "fast." when america's post-market show continues. i'm here on this tiny little plane, and guess what...
12:19 am
i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare. i'm bill kurtis, and i've got plenty of room for the internet. and the nation's fastest 3g network. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.
12:20 am
you'll love it. your old mop will just have to get over it... [ engine rattles ] [ man ] love stinks! ♪ love stinks! ♪ yeah! yeah! [ female announcer ] new swiffer wet jet is redesigned. it cleans deep in corners. its solution penetrates layers of dirt and its absorbent pad locks it away to clean better than a mop. the newly redesigned swiffer wet jet.
12:21 am
investing in commodity etfs, particularly ones that track oil as well as natural gas. well, looming cftc regulations potentially eliminating the role of speculators in the market and the number of contracts traded could impact some of these etfs. what will the impact be for you
12:22 am
as the individual?l? here with the answer, john highland, chief investment officer of united states commodity funds, the company that launched the uso as well as the ung. john, a pleasure to speak with you. >> thank you, melissa. >> it seems like for the average investor out there this really could limit the number of ways they can participate in this market. if it is true that these regulations change the way these etfs work. is that your interpretation of this? >> yes. i think what we saw happen with dxo and what we anticipate happening with -- across the board is going to be an increase in expenses for the average investor to gain exposure. by the way, let's be very clear. i don't find plausible the explanation put forth by some that power shares db is terminating this exchange traded note because -- directly because of these position limits. as pete pointed out, dxo's an exchange trade note. they don't own any futures. they don't own any swaps. deutsche bank maintains a hedge that delivers this performance. and deutsche bank certainly is not being restricted. so why did db kill this product? why are they handing half a billion dollars back? i don't think it's because of these -- directly because of these position limits. i think it's because the cost of
12:23 am
that swap that deutsche bank uses to hedge their position is increasing and it's increasing for the exchange traded notes and for others. and the problem with the etn is they have a fixed amount that they get paid. say, 75 basis points. so if over the last 12 months the cost of hedging this kind of exposure is increasing for the bank that's issued the etn, pretty soon it becomes -- it's not cost effective to do it and to get rid of it. >> we will ask powershares those very questions, mr. hyland, but i do want to get back to ung and uso because that is an instrument a lot of our viewers like to trade. a lot of investors are skeptical of putting new money to work because it seems like regulators out there might change the rules of the game midway. these things are trading at a premium to the underlying
12:24 am
contract. tell us why fresh capital should go to work. >> well, i think there's a lot of empirical evidence and d theoretical evidence why investors should be able to access exposure to all commodities and not just gold, as you addressed in the last section. the problem that we have here is there is this belief on the part of some that the recent run-ups in 2008 and the price of oil and natural gas were somehow the fault of passive index investors and that they somehow must be restricted. our belief and what we testified to the cftc is that the outcome of potential regulation is just going to drive up the cost. you're going to end up with instead of a few large liquid low-cost etfs or etns providing exposure, you're going to end up with a larger number of smaller etfs and etns. they're going to be more expensive. and that cost is going to be
12:25 am
directly born by retail investors and others who make use of them. i think that's the outcome here. and i think what you saw with dxo is just the canary in the coal mine. they're going to shut it down because at 75 basis points they can't make any money operating it in a world where futures and hedges, swap hedges cost more than they cost six months ago or 12 months ago because the market's scared spitless about, you know, poorly applied regulations. until they know what the regulations are, they're going to continue to be scared. >> john, it's karen. let me ask you what do you think is the future fate of the 2x and 3x and negatively correlated ones that are really the go-go etfs that have had a lot of noise that relates to whatever the underlying thing is that they're trying to track. >> there's two separate problems. in the case of the double x and triple x and i think there's a quadruple x in registration, i think they have a problem
12:26 am
whether they are double the s&p 500 or double crude oil. there's a whole problem with making sure that they're used suitably by investors, particularly less sophisticated investors. that's one problem.. the other problem, particular to the commodity etfs that are doubles and triples, that are the exchange traded note format, is i believe that there is a potential outcome that leads to most of them simply being shut down. and then curiously enough, three months later reissued but instead of with 75 basis points of expenses with 100 or 125. that's how the banks will adjust to the brave new world. >> john, give me the worst case scenario here. let's say that the proposals that are being made by the cftc actually go into effect. what is the worst case scenario for holders of ung as well as the oil etf? is it simply more fees or is there a possibility that some of these etfs will be forced to close? >> i think the likely outcomes
12:27 am
are twofold, and this is what we testified. you could see a situation where the large etfs have to get smaller so that they will close. and they may return capital to investors. so you will instead of having one large commodity etf in a given sector and two or three very small ones, you may end up with three or four small to medium size ones. all of them will be more expensive. >> okay. john -- >> and the etns will simply shut down and restart with higher expenses three months later. >> john, great to have you with us. thanks so much for your time. we do appreciate it. >> you're welcome. >> john hyland. so given that, what do you do if you're a holder of a large commodity etf if the possibility is out there that it will return your capital? >> i would be a little nervous about it. >> would you sell? >> i don't want to cause a panic there but seriously, if you're listening to the guy who runs the largest oil etf and he says there is a possibility that some of these larger etfs within a sector will shut down what do
12:28 am
you -- >> aside from getting to the cost issue, we haven't gotten to the cftc. i don't know if joe wants -- >> i think what john said, too, that is a little bit concerning is that he believes that there will be three or four start-ups then to occur. that's problematic. i view that as an issue. i don't want that. i would rather there just be this one uso, this one ung. >> with the lower fee. >> exactly. moving on to the next trade, you've heard it on this desk before. the next shoe to drop in real estate will be commercial real estate. the rest of the world is finally catching up. >> commercial real estate is at an inflection point. the losses are going higher. >> the commercial real estate sector is definitely underwater. >> commercial is much closer to the early stages of the problem. >> the next big shoe to drop is commercial real estate. >> commercial real estate is going to be a bigger driver of losses and bank failures. we've known about this for some time. >> all right. so many people are talking about it, karen, which begs the question. if so many people are talking
12:29 am
about it, could it really be a shoe to drop? >> i would think the shoe had dropped already. actually, i think the short commercial real estate trade, i really believe is over. this is a trade we talked about for a long time, and it happened sort of in slow motion. and i think if you look at it i think we have a chart of the iyr which is a proxy of the real estate index. this is publicly traded reits. so that's something to keep in mind. the commercial real estate market is multiple, multiple times what you see in the publicly traded reits. but for those, that shows you i think we bottomed out for -- i wouldn't short them here for three reasons. one, they've come down so, so far. two, a lot of them have been able to raise capital. ones that really had very pressing refinancings due in the very short term, they were able to raise capital. look at brookfield properties smack in the middle of new york city, not a great place to be in terms of office space. a couple of weeks ago they were able to raise 450 million of
12:30 am
debt and 450 million of equity. that would have been unthinkable six months ago. so a lot of them aren't going to be able to do that. financing markets are open again. that is also a critical thing. so for the reit space, this is just reit equities, i wouldn't be short. >> and the one reason i wouldn't short them is because i've tried. i've shorted essex property. i've shorted avalon bay. and i've lost money. and that tells you don't short them, the trade's not working here.
12:31 am
12:32 am
imagine... one scooter or power chair that could improve your mobility and your life. one medicare benefit that, with private insurance, may entitle you to pay little to nothing to own it. one company that can make it all happen... your power chair will be paid in full. the scooter store. hi i'm dan weston. we're experts at getting you the scooter or power chair you need. in fact, if we pre-qualify you for medicare reimbursement and medicare denies your claim, we'll give you your new power chair or scooter free. i didn't pay a penny out of pocket for my power chair. with help from the scooter store, medicare and my insurance covered it all. call the scooter store for free information today. call the number on your screen for free information.
12:33 am
welcome back. you're watching "fast money" on cnbc. we've got to get back to one of the biggest stories of the day. in a new report the watchdog for the s.e.c. blames the agency for missing numerous chances to uncover and stop the madoff ponzi scheme. cnbc's mary thompson's back at headquarters with the latest. mary? >> the report of stunning incompetence, melissa. a damning report from the s.e.c.'s inspector general on the agency's handling of five separate madoff investigations. a 22-page executive summary of the soon to be released report detailing how staffers failed to follow up with third parties to verify madoff's trades. they discredited complaints from madoff whistle blower harry markopolos because he didn't work at madoff's firm and he wasn't an investor. and they also gave madoff a pass because he "didn't fit the
12:34 am
profile of a ponzi scheme operator." among the report's revelations, complaints were made to the s.e.c. that madoff commingled funds of his investors with that of his legitimate broker dealer and also tried to intimidate s.e.c. staffers by telling them he was on the short list to become chairman of the s.e.c. talk about the fox in the henhouse, melissa. back to you. >> mary thompson, thanks so much. i love that. did they expect the funds to be separated out into ponzi scheme funds? >> right. >> and for him to be an asocial person to -- i mean, it's really stunning what they think doesn't fit the profile. >> and he doesn't seem like the ponzi scheme kind of guy. >> right. >> that's part of the appeal. >> the beauty of the ponzi schemer. >> and the scary part of it is now the way the market has recovered, if there's another one out there, s.e.c.'s not finding it. >> no. all right. let's move on. time for "analyze this." retailers report august same-store sales. retailers using back to school shopping as a preview of what's to come for the holiday season. joining us with an outlook for the fall and beyond, kimberly greenberger retail analyst for citi.
12:35 am
always nice to see new person. >> thanks, melissa. >> this year is back to school, will be a good barometer for holiday? >> we do think back to school will be a good barometer. historically if you look at the correlation between august and september sales and holiday sales we have found over a 65% correlation between the two. we think it's a great barometer. but this year in particular we'll have to wait and see the two months combined, august and september, because with that later labor day that's pushing a lot of sales out of august into september this year. >> all right. so who's going to beat? who would you recommend buying? >> our favorites here, urban outfitters and j. crew. both retailers that are absolutely outexecuting the competition. consumers are willing to spend, but they're being very choosy. merchants and retailers have to put product out there that consumers absolutely have to have. these are two retailers that are absolutely doing it. >> kimberly, i'm with you on j. crew. just reported a sick quarter, inventory's in line, but the stock's up 200% since march. valuations from where i sit are rich.
12:36 am
can you still own it here on a benign tape or the tape's going lower, even worse? >> we think that the retailers are likely to consolidate over the next four to five weeks before moving higher yet again through the october, november time frame. so we think you can sort of ease into it here over the next four five weeks but yes, still a buy, we see it going to 40 over the next year, year and a half. >> what about gap? they've got old navy coming back and now they have this whole team denim new objective. what do you think with gap? >> the denim at the gap brand looks fantastic. we think that they probably underbought it relative to the demand out there. so we think good profits, very lean inventory. however could hold back sales a bit. we still think there's some up side to the stock but we see better up side for example at j. crew and urban outfitters.
12:37 am
>> j. crew, just to get on guy's point for a little more, j. crew and some other names trade at such rich multiples, it's hard to see how is the valuation going to be even higher unless they really blow away earnings? is the street so wrong on where they're going to come in with earnings that that's how the stock will improve? because you can't hope for multiple expansion here. >> exactly. no multiple expansion. just in the last two quarters j. crew has beat earnings estimates by over a dime each quarter. roll that out to third and fourth quarter when they actually make a bit more money, particularly in third quarter, and we think you'll see beats right on through. >> how about tjx? that trades at a 15 p/e and it's near its highs. is that one ready to go to the next level? >> tjx is an amazing company. we think that it's a great organization, incredibly well run. the difference, however-s that urban and j. crew are at depressed operating margins. so the opportunity to beat on the earnings is much more substantial. t.j. has an opportunity the next two quarters for some earnings beats, but this year we think will be a peak operating margin year for tjx. really tough to grow exceptional earnings starting next year.
12:38 am
>> kimberly, thanks so much for your time. >> thanks, melissa. >> kimberly greenberger. coming up, coke, las vegas sands and take two interactive all have one thing in common, on our list of the day's pops and drops. ♪ yes, you're lovely... ♪ what do you think? hey, why don't we use our points from chase sapphire and take a break? we can't. sure, we can. the points don't expire... ♪ there is nothing for me... ♪ there's no travel restrictions... we could leave tomorrow. we can't use them for a vacation. you can use the points for just about anything.
12:39 am
i know... ♪ the way you look tonight ♪ chase what matters. get your new chase sapphire card at we're shopping for car insurance, and our friends said we should start here. good friends -- we compare our progressive direct rates, apples to apples, against other top companies, to help you get the best price. how do you do that? with a touch of this button. can i try that? [ chuckles ] wow! good luck getting your remote back. it's all right -- i love this channel. shopping less and saving more. now, that's progressive. call or click today. dominates heartburn. 24/7...
12:40 am
how you could start saving.
12:41 am
welcome back to "fast money." wanted to check in on some after-hours action, i should say. hovnanian reporting earnings missing analysts' estimates. cancel rate -- cancellation -- i can't speak right now. cancellation rate. but we are seeing the stock dip in the after-hours session, down about 9% right now, this of course on top of a 7% decline during the session. we should note that ubs did cut based on valuation horton as well as ryland. so a lot of negative sentiment on the home builders could continue into tomorrow's session. >> told you stay away from those last two days, mel. >> we told you. >> told you. >> told you so. >> nah nah. >> that was classic. kidding. >> time now for "pops and drops." got a pop here for coca-cola. up 3%. karen. >> i couldn't tell you why. just because it's effervescent. i don't know why. it was downgraded yesterday. it wasn't downgraded today. that's not a good reason. just effervescent. >> pop here for textron. up 12%, pete.
12:42 am
>> solid durable goods about a week or so ago. then you get the good ism number, then a morgan stanley upgrade with a 25 target. today conviction buy list from goldman sachs, $23 target. giddy-up, this thing is off to the races. >> brown-forman up 6% on the session. joe. >> a little jack daniel's pop for them. bottom line, sales still down, down about 6%. 44.29 is your stop on this one. did break out today above the 200-day moving average. >> we should note we've got the chief of diageo north american in the house, joining us in a few minutes' time. pop here. >> this stock in the same range for a while. for all you mets fans out there that are miserable. at least tommy a.g. was the rookie of the year in 1966. because you've got nothing else to live on, baby. you're down in the dump. sorry. >> pop here for the duggars. you don't watch tlc, do you? >> no. >> forget octomom. michelle duggar just announced she is pregnant with her 19th child. the duggars also expecting their first grandchild due knockout
12:43 am
from the family's first-born son. >> it's ridiculous. >> i mean, they've changed the name of the show, they have this reality show on tlc, they've changed it a couple times, "17 kids and counting." 18. and now -- >> maybe they should start watching television. you know what i mean? >> they must like sex. >> there you go. >> whoa. family show. pop here for -- move on here. take two interactive. it was up 8%. karen. >> yeah, they lost money but not as much as the street was expecting. so that was a good thing. and revenue wasn't quite as bad as the street was expecting. they also settled a lawsuit. they lost a verdict, 20 million
12:44 am
bucks for having sex in a video game that they didn't advertise. and their insurance paid 15 million, they only paid 5. nice job. >> drop here lloyd banking down 5%. >> the financials here and across the pond have all had a huge run. almost a $4 stock in july, got up over 7. now it's just on a pullback phase. no news out there other than just pullback. >> drop here for the home builders etf, down $2 on the >> told you to stay away, right, guy? >> hey, come on. >> do it again. >> i mean, come on. you said do it again. >> pop here for casinos. lvs, mgm, they were up. >> back on august 3rd, you weren't here, erin burnett was sitting in the seat. dock and i were in las vegas cute little matching jackets on. stock's up 20% since then. i know doc is watching. somebody put a 20% price target on lvs. it moves higher from here. >> we've got a drop for mom jeans. karen, you don't wear mom jeans. i mean, you're a mom and you wear jeans but not mom jeans. l.l. bean the company best known for its high waisted wrinkle-free mom jeans is turning over a new leaf. the 98-year-old company -- >> that wasn't me. >> a more relevant line set to launch next year. so maybe karen will buy jeans from l.l. bean. >> maybe.
12:45 am
>> no way. coming up, johnny, jose, and the captain, the man behind these booze names, tells us if it can carry on through the fall. i'm here on this tiny little plane, and guess what... i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare. i'm bill kurtis, and i've got plenty of room for the internet.
12:46 am
and the nation's fastest 3g network. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t.
12:47 am
12:48 am
all right. let's get to our prop desk for one of our traders' best plays. pete, you're watching the engineering names. >> you take a look at ubs and today they were out with siemens as well as abb they like the names, they're pushing forward. also you get cooper industries getting some favorable comments from citi. talking about we're at the lower end. we're starting to turn right now. and it also goes back to textron where we had all that unusual options activity about a week or two ago.texttron where we had that unusual option activity. that continues and you continue to see these upgrades. the financing of these firms and now you look at these balance sheets, interesting place to look at right now, pes very slow, upside very high. >> does your portfolio need a little captain in it?
12:49 am
maker of captain morgan has doubled in the s&p 500 over the last three months, but last week, the company lowered its forecast. here to set the record straight is ivan. great to have you with us. >> good to be with us. >> what sorts of trends are you seeing? we heard from a competitor they're seeing a tradedown. are you seeing that as well here in north america? >> first let me say, the beverage alcohol is very resilient, even in the toughest recession, spirits are up in the u.s. consumers are entertaining more at home, going out less, bars and restaurants in new york are less busy. we are seeing a move to trusted brands. so even in this environment, brands like captain morgan and smirnoff are performing strongly. and finally, this is an environment which is ripe for innovation. some of the products, like that
12:50 am
smirnoff lemon aid and long island iced tea are great ways to entertain at home. we see the industry as being resilient. >> let's say for johnny walker, are you seeing more demand for the lower, you know, colored labels as opposed to johnny walker gold or green and how does that impact your margins? >> firstly, the breadth of our portfolio, and johnny walker is a great example, where from black to gold to green to blue, we have a terrific portfolio. there are sop shifts in the past 12 months but we see the trend towards premiumization, particularly in the emerging markets, the higher end of scotch whiskey has great prospects and continued to do as well even through the tough
12:51 am
economic cycle. >> i'm a johnny black on the rocks guy. vodka can you make? it doesn't seem can be you can't grow organically in this environment, i don't think. >> our guidance has been around -- a backdrop of being a little cautious about the consumer recovery. if you look at the fundamental metrics we look at, it is consumer confidence and unemployment. we do want to see those improve and we would feel more bullish about the growth prospects in our business. it's linked to gdp growth in the emerging markets. as of now, we are not seeing the pickup in consumer demand, even though we are seeing the resilience and our business is still in growth. >> ivan, great to have you with us. >> fine-looking tie there.
12:52 am
>> the stock is fine. it's had a nice little move. it's not a fast money stock. i think it's a great company, i don't know where the growth comes from frankly. >> okay. "fast money" final trade right after this break. introducing the all new chevy equinox. with an epa estimated 32 miles per gallon. and up to 600 miles between fill ups. it's the most fuel efficient crossover on the highway. better than honda cr-v, toyota rav4 and even the ford escape hybrid. the all new chevy equinox.
12:53 am
12:54 am
let's do the poll of the day. tonight's question is, what is a
12:55 am
better bet from now to the end of the year? logon right now to vote. you can also write in your own choices, whatever you want. do not miss minnesota governor tim pawlenty tomorrow. he will be joined by ed rendell as well as florida governor charlie crist starting tomorrow. j.t.? >> i'm long one tiffany. >> gilead made some interesting comments about the swine flu. >> american axle. i think it works out. >> the options express trade, 9,000 before noon today. you have to like that going forward. >> thanks for watching. tune in tomorrow, 12:45, back at 5:00 for the big show. he ran off with his secretary! she's 23 years old!
12:56 am
- oh, come on. - enough! you get half and you get half. ( chirp ) team three, boathouse? ( chirp ) oh yeah-- his and hers. - ( crowd gasping ) - ( chirp ) van gogh? ( chirp ) even steven. - ( chirp ) mansion. - ( chirp ) good to go. ( grunts ) timber! ( chirp ) boss? what do we do with the shih-tzu? - ( crowd gasps ) - ( chirp ) joint custody. - phew! - announcer: get work done now. communicate in less than a second with nextel direct connect. only on the now network. , hard of hearing and an people with speech dischities ♪ ♪ come on, people, now ♪ smile on your brother ♪ everybody get together
12:57 am
♪ try to love one another right now ♪ [ female announcer ] the time has come to get a diaper that really works, without the really high prices. the time has come for luvs. say yes to ultra leak protection, no to pricey diapers. it's time for luvs with the luvs money back guarantee. ♪
12:58 am
in this episode of "american greed," he calls it a new era forgiving. >> nothing is as concrete as a nonprofit organization. >> one man says it's old fashion
12:59 am
fraud. high society patrons out $100 million in a colossal charity scandal. >> it was one of the most disappointing days of my life. and later -- >> are you the kind of person who likes to make money? >> in sin city, eric stein runs a scam. now the con man turned con man is talking. and what he says may save you from getting swindzled. whether it's improving the lives of desperately poor kids in brazil, or working with aids orphanages in africa, colorado based world venture is making a difference. >> we'ren


info Stream Only

Uploaded by TV Archive on